DEPUTY COMMISSIONER OF INCOME TAX -2(1) vs. M/S AARTI INFRASTRUCTURE AND BUILDCON LTD.

Q: Which sections of the Income-tax Act were involved?

Section 143(3), Section 250(4), Section 260A

TAXC/73/2019HC ChhattisgarhCGHC01024747201920 January 2020Author: HON'BLE THE CHIEF JUSTICE,HON'BLE SHRI JUSTICE PARTH PRATEEM SAHU3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal was devoid of any merit and did not involve any substantial question of law. The Court was of the view that the decision rendered by the Tribunal was clearly on a question of facts. Therefore, interference under Section 260A of the Income Tax Act, 1961, was declined. The appeal was dismissed. The Court did not decide the merits of the substantial questions of law raised by the Revenue, as it found them to be factual in nature. No specific finding was given on the individual issues raised by the Revenue, as the appeal was dismissed on the preliminary ground that no substantial question of law arose.

What were the facts?

The assessee, M/s. Aarti Infrastructure and Buildcon Ltd., filed its return declaring a total income of Rs. 2,20,25,990/-. The Assessing Officer (AO) selected the case for scrutiny and completed assessment under Section 143(3) of the Income Tax Act, 1961, making an addition of Rs. 9,17,91,005/-. The assessee appealed to the Commissioner (Appeals), who allowed the appeal, deleting the addition. The Revenue then appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the appeal, confirming the deletion. The Revenue has now filed an appeal before the High Court challenging the ITAT's order.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether the ITAT was justified in confirming the deletion of the addition of Rs. 9,17,91,005/- by the CIT(A), ignoring the AO's findings based on a seized pen drive which indicated sales consideration of land to be Rs. 12,13,11,005/- instead of Rs. 2,95,20,000/-, thereby rendering the decision perverse? 2. Whether the ITAT was justified in confirming the deletion of the addition of Rs. 9,17,91,005/- by the CIT(A), by relying on the CIT(A)'s findings which ignored a discrepancy where payment of Rs. 1,80,00,000/- was made on 20.01.2006, despite the purchaser, M/s. Purandar Promoters and Developers Pvt. Ltd., being incorporated on 23.05.2006, and ignoring documentary evidence and the ratio in Sumati Dayal vs. CIT? 3. Whether the ITAT was justified in confirming the CIT(A)'s order, which erred by giving a finding contrary to the ratio in CIT vs. S. Ajit Kumar, wherein material found from a connected person's premises can be used as evidence for addition? Contentions of the Revenue: The Revenue argued that the ITAT's decision was perverse and based on twisted and contradictory findings of the CIT(A). They contended that the CIT(A) ignored glaring discrepancies in documentary evidence and the ratio of the Supreme Court in Sumati Dayal vs. CIT and CIT vs. S. Ajit Kumar. The Revenue relied on the material found in the seized pen drive and the fact that payments were made before the incorporation of the purchaser. Contentions of the Assessee: The judgment records no specific contentions for the assessee.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250(4),Section 260A

AI-generated summary — verify with the full judgment below

1 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR TAXC No. 73 of 2019 • Deputy Commissioner of Income Tax -2(1), Central Revenue Building, Civil Lines, Raipur, Chhattisgarh. ---- Appellant Versus • M/s. Aarti Infrastructure and Buildcon Ltd., Shankar Nagar, Raipur (C.G.) ---- Respondent ________________________________________________________________ For Appellant/Revenue : Shri Amit Chaudhari and Ms. Naushina Ali, Advocates _________________________________________________________________ Hon'ble Shri P. R. Ramachandra Menon, Chief Justice Hon'ble Shri Parth Prateem Sahu, Judge Judgment on Board P.R. Ramachandra Menon, Chief Justice 21.01.2020

The appeal is arising from the order dated 15.02.2018 passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur in IT(SS)A No.30/RPR/2013. 2. On filing the return by the Assessee declaring a total income of Rs.2,20,25,990/-, the case was selected for scrutiny/assessment and the proceedings were completed in terms of Section 143(3) of the Income Tax Act, 1961 whereby an addition to the extent of Rs.9,17,91,005/- was made and assessed accordingly.

The course and proceedings pursued by the Department, made the Assessee to feel aggrieved, who filed an appeal before the Commissioner (Appeals) where the appeal was allowed. This made the Department to take up a matter before the Tribunal referring to the facts and figures, where interference was declined and the appeal was dismissed. This, in turn is put to challenge in this appeal preferred by the Revenue, suggesting the following questions as the substantial questions of law :

“1. “Whether on the point of law and on the facts and circumstances of the case, the ITAT was justified in confirming the order of the Id. CIT(A) who has deleted the addition of Rs. 9,17,91,005/- by ignoring the facts brought on record by the AO that as per the transactions recorded in the seized pen drive, the sales consideration of the land reflected there is to the tune of Rs.12,13,11,005/- and not Rs. 2,95,20,000/-, thereby rendering the decision which is perverse?” 2. “Whether on the point of law and on the facts and circumstances of the case, the ITAT was justified in confirming the deletion of addition of Rs. 9,17,91,005/- by the Id. CIT(A), thereby placing reliance on the twisted and contradictory finding of the CIT(A), as the CIT(A) having concurrent powers of the AO u/s 250(4) of the Act ignored the glaring discrepancy of the facts of transaction on record that though the impugned purchaser of land M/s. Purandar Promoters and Developers Pvt. Ltd. was incorporated on 23.05.2006 yet the payment of Rs.1,80,00,000/- was made on 20.01.2006 and thereby ignoring the discrepancies in the 3 documentary evidences brought on record, and ignoring the ratio of precedent of preponderance of probability as has been laid down by the Hon'ble Supreme Court in the land mark case of Sumati Dayal vs. CIT (1995, 214 ITR, 801 SC) ?” 3. “Whether on the point of law and on the facts and circumstances of the case, the ITAT was justified in confirming the order of the CIT(A) who has erred by giving a finding which is contrary to the ratio of the decision of the Hon'ble Supreme Court in the case of 2010, wherein the Hon'ble Supreme Court has held that the material found from the premise of connected person can be utilized as evidence for making addition in the income of the assessee ?”

Heard Shri Amit Chaudhari, the learned standing counsel for the Department at length.

Considering the nature of pleadings raised and also the discussion made by the Tribunal in detail, we are of the view that the decision has been rendered by the Tribunal clearly on question of facts and it does not involve any question of law; much less any substantial question of law.

This appeal is devoid of any merit, so as to have it entertained in terms of Section 260A of the Income Tax Act, 1961. Interference is declined and appeal stands dismissed. (P.R. Ramachandra Menon) (Parth Prateem Sahu)

Chief Justice Judge Chandra

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